Good points above. I can agree that in certain, limited circumstances it makes more sense to take out a zero or low interest loan and put your money to better use. That's just basic math. Maybe that's what LB was trying to say but it got jumbled up in the context.

It all depends on what the alternative is. If you borrow at a cheap rate, and then save the equivalent amountat a higher rate, then yes you're better off. Both the purple text and the green text need to hold true.

All too often, people aren't disciplined about the saving part.

This is definitely the crux of the issue with that theory.

No...you don't actually HAVE to save the equivalent amount.....that's silly. If I buy a new truck for $35,000 at 0% interest I don't have to save $35,000 to make it work for me. In fact, I can save NOTHING and just the fact that I didn't use my own money that was already/still is gaining interest makes it a win for me. Like I said......you all sure like to complicate things. LOL

No one said you HAVE to save the equivalent amount. But that is what a lot of folks use to justify going further into debt, and fail to do what they set out to (save/invest that money) and just end up further in the hole. If you don't think that is a very real scenario, then well --- you just don't get it.

You're right.....I don't understand not using my own money to get something I want. ~trying to keep from laughing~

Let me say this again....slowly......you.....don't.....have......to.....save.......a.....PENNY.....to.....make.......it.....work.....for.....you. You just don't use the money you have that is already making you more money. You bolded JUSTIFY like that's really important. It's not for me.

How about this one.....do I need to justify this or does this just take common sense? I charge EVERYTHING I buy/spend every month on a cradit card that ends up giving me free nights at hotels....something I need quite a bit these days due to triathlon travel fo rmy kids. Some months I go nearly $3000.00 in debt......it's never less tham $1500.00 or so. I pay it off every month and it costs me nothing. Of course, I can look at it like alot of people want to and say....."oh god, what if I lose my job?" Well, hell, what if I get hit by a truck, or the sun quits shining, or about a million other scenarios..... I have no interest in living that way....never have. I'm more than happy to use someone else's money so that my money keeps working. Or, in the case of the credit card, I'm using someone else's money to save money that I don't even have to have!!! LMAO

YOU DON'T HAVE TO SAVE ANYTHING!!!!!!!

Clearly we are not talking about debt that extends less than 30 days here. Get it? Are you sure?

Okay lets take your truck example. You buy a $40k truck on zero down no interest loan, you pay off $20k in the first 2.5 years of the loan, then you lose your job, can't make the payment and they take the truck back. You are out $20k with nothing to show for it.

You pay cash for a $40k truck, you keep it 2.5 years, you lose your job and need money. You now have a truck worth $30k that you can sell and have the money in hand. Or you can keep the truck as it is paid for so you can go out job hunting. Neither situation is ideal as a car is a heavily depreciating asset in most cases, but I would prefer scenario #2 if I were in the jobless no money situation that many people found themselves in post 2008.

Now obviously this scenario would play out for someone that does not have a large savings account and/or the most stable career. I would argue they should not be buying the $40k truck in the first place but that is obviously not how many people operate.

I agree with your premise. Personally I used someone else's money at a low interest rate to buy a truck for $21k that is now worth $26k because I was able to find an asset in the car market that would appreciate rather than fall on it's face like most vehicles do. So in my case it works. But in the case of the construction worker who makes steady money now but might not in 3 months, it is probably not in his best interest to "buy as much truck as he can with someone else's money" just so he can make payments for a year or so and then be underwater or lose it all together.

Good points above. I can agree that in certain, limited circumstances it makes more sense to take out a zero or low interest loan and put your money to better use. That's just basic math. Maybe that's what LB was trying to say but it got jumbled up in the context.

It all depends on what the alternative is. If you borrow at a cheap rate, and then save the equivalent amountat a higher rate, then yes you're better off. Both the purple text and the green text need to hold true.

All too often, people aren't disciplined about the saving part.

This is definitely the crux of the issue with that theory.

No...you don't actually HAVE to save the equivalent amount.....that's silly. If I buy a new truck for $35,000 at 0% interest I don't have to save $35,000 to make it work for me. In fact, I can save NOTHING and just the fact that I didn't use my own money that was already/still is gaining interest makes it a win for me. Like I said......you all sure like to complicate things. LOL

No one said you HAVE to save the equivalent amount. But that is what a lot of folks use to justify going further into debt, and fail to do what they set out to (save/invest that money) and just end up further in the hole. If you don't think that is a very real scenario, then well --- you just don't get it.

You're right.....I don't understand not using my own money to get something I want. ~trying to keep from laughing~

Let me say this again....slowly......you.....don't.....have......to.....save.......a.....PENNY.....to.....make.......it.....work.....for.....you. You just don't use the money you have that is already making you more money. You bolded JUSTIFY like that's really important. It's not for me.

How about this one.....do I need to justify this or does this just take common sense? I charge EVERYTHING I buy/spend every month on a cradit card that ends up giving me free nights at hotels....something I need quite a bit these days due to triathlon travel fo rmy kids. Some months I go nearly $3000.00 in debt......it's never less tham $1500.00 or so. I pay it off every month and it costs me nothing. Of course, I can look at it like alot of people want to and say....."oh god, what if I lose my job?" Well, hell, what if I get hit by a truck, or the sun quits shining, or about a million other scenarios..... I have no interest in living that way....never have. I'm more than happy to use someone else's money so that my money keeps working. Or, in the case of the credit card, I'm using someone else's money to save money that I don't even have to have!!! LMAO

YOU DON'T HAVE TO SAVE ANYTHING!!!!!!!

Clearly we are not talking about debt that extends less than 30 days here. Get it? Are you sure?

Okay lets take your truck example. You buy a $40k truck on zero down no interest loan, you pay off $20k in the first 2.5 years of the loan, then you lose your job, can't make the payment and they take the truck back. You are out $20k with nothing to show for it.

You pay cash for a $40k truck, you keep it 2.5 years, you lose your job and need money. You now have a truck worth $30k that you can sell and have the money in hand. Or you can keep the truck as it is paid for so you can go out job hunting. Neither situation is ideal as a car is a heavily depreciating asset in most cases, but I would prefer scenario #2 if I were in the jobless no money situation that many people found themselves in post 2008.

Now obviously this scenario would play out for someone that does not have a large savings account and/or the most stable career. I would argue they should not be buying the $40k truck in the first place but that is obviously not how many people operate.

I agree with your premise. Personally I used someone else's money at a low interest rate to buy a truck for $21k that is now worth $26k because I was able to find an asset in the car market that would appreciate rather than fall on it's face like most vehicles do. So in my case it works. But in the case of the construction worker who makes steady money now but might not in 3 months, it is probably not in his best interest to "buy as much truck as he can with someone else's money" just so he can make payments for a year or so and then be underwater or lose it all together.

NO!!! I have 20 grand in the bank that can cover that.....but it's been making me money for the 2.5 years you are talking about. If it only made 4% I'm still $2000.00 ahead of where I would have been. Did they have math in school for gen Y'ers?? Seriously.

Look man.....if you don't have 20 grand in the bank to cover paying off the rest of your truck, then you had no business in a $40,000 truck. Oh.....wait......now we ARE getting back to entitlement aren't we? LMAO

Good points above. I can agree that in certain, limited circumstances it makes more sense to take out a zero or low interest loan and put your money to better use. That's just basic math. Maybe that's what LB was trying to say but it got jumbled up in the context.

It all depends on what the alternative is. If you borrow at a cheap rate, and then save the equivalent amountat a higher rate, then yes you're better off. Both the purple text and the green text need to hold true.

All too often, people aren't disciplined about the saving part.

This is definitely the crux of the issue with that theory.

No...you don't actually HAVE to save the equivalent amount.....that's silly. If I buy a new truck for $35,000 at 0% interest I don't have to save $35,000 to make it work for me. In fact, I can save NOTHING and just the fact that I didn't use my own money that was already/still is gaining interest makes it a win for me. Like I said......you all sure like to complicate things. LOL

No one said you HAVE to save the equivalent amount. But that is what a lot of folks use to justify going further into debt, and fail to do what they set out to (save/invest that money) and just end up further in the hole. If you don't think that is a very real scenario, then well --- you just don't get it.

You're right.....I don't understand not using my own money to get something I want. ~trying to keep from laughing~

Let me say this again....slowly......you.....don't.....have......to.....save.......a.....PENNY.....to.....make.......it.....work.....for.....you. You just don't use the money you have that is already making you more money. You bolded JUSTIFY like that's really important. It's not for me.

How about this one.....do I need to justify this or does this just take common sense? I charge EVERYTHING I buy/spend every month on a cradit card that ends up giving me free nights at hotels....something I need quite a bit these days due to triathlon travel fo rmy kids. Some months I go nearly $3000.00 in debt......it's never less tham $1500.00 or so. I pay it off every month and it costs me nothing. Of course, I can look at it like alot of people want to and say....."oh god, what if I lose my job?" Well, hell, what if I get hit by a truck, or the sun quits shining, or about a million other scenarios..... I have no interest in living that way....never have. I'm more than happy to use someone else's money so that my money keeps working. Or, in the case of the credit card, I'm using someone else's money to save money that I don't even have to have!!! LMAO

YOU DON'T HAVE TO SAVE ANYTHING!!!!!!!

Clearly we are not talking about debt that extends less than 30 days here. Get it? Are you sure?

Okay lets take your truck example. You buy a $40k truck on zero down no interest loan, you pay off $20k in the first 2.5 years of the loan, then you lose your job, can't make the payment and they take the truck back. You are out $20k with nothing to show for it.

You pay cash for a $40k truck, you keep it 2.5 years, you lose your job and need money. You now have a truck worth $30k that you can sell and have the money in hand. Or you can keep the truck as it is paid for so you can go out job hunting. Neither situation is ideal as a car is a heavily depreciating asset in most cases, but I would prefer scenario #2 if I were in the jobless no money situation that many people found themselves in post 2008.

Now obviously this scenario would play out for someone that does not have a large savings account and/or the most stable career. I would argue they should not be buying the $40k truck in the first place but that is obviously not how many people operate.

I agree with your premise. Personally I used someone else's money at a low interest rate to buy a truck for $21k that is now worth $26k because I was able to find an asset in the car market that would appreciate rather than fall on it's face like most vehicles do. So in my case it works. But in the case of the construction worker who makes steady money now but might not in 3 months, it is probably not in his best interest to "buy as much truck as he can with someone else's money" just so he can make payments for a year or so and then be underwater or lose it all together.

NO!!! I have 20 grand in the bank that can cover that.....but it's been making me money for the 2.5 years you are talking about. If it only made 4% I'm still $2000.00 ahead of where I would have been. Did they have math in school for gen Y'ers?? Seriously.

Look man.....if you don't have 20 grand in the bank to cover paying off the rest of your truck, then you had no business in a $40,000 truck. Oh.....wait......now we ARE getting back to entitlement aren't we? LMAO

I think I understand LB's point now. I have 20 grand to buy a car. I get a loan with a low interest rate. Now I have a car. I'm paying the loan back monthly at such and such a rate, but I have my 20 grand still to play with and make more money? Am I getting this right LB?

The problem is there is little I can do with that money now that will make me more money than it costs to get a loan.

Good points above. I can agree that in certain, limited circumstances it makes more sense to take out a zero or low interest loan and put your money to better use. That's just basic math. Maybe that's what LB was trying to say but it got jumbled up in the context.

It all depends on what the alternative is. If you borrow at a cheap rate, and then save the equivalent amountat a higher rate, then yes you're better off. Both the purple text and the green text need to hold true.

All too often, people aren't disciplined about the saving part.

This is definitely the crux of the issue with that theory.

No...you don't actually HAVE to save the equivalent amount.....that's silly. If I buy a new truck for $35,000 at 0% interest I don't have to save $35,000 to make it work for me. In fact, I can save NOTHING and just the fact that I didn't use my own money that was already/still is gaining interest makes it a win for me. Like I said......you all sure like to complicate things. LOL

No one said you HAVE to save the equivalent amount. But that is what a lot of folks use to justify going further into debt, and fail to do what they set out to (save/invest that money) and just end up further in the hole. If you don't think that is a very real scenario, then well --- you just don't get it.

You're right.....I don't understand not using my own money to get something I want. ~trying to keep from laughing~

Let me say this again....slowly......you.....don't.....have......to.....save.......a.....PENNY.....to.....make.......it.....work.....for.....you. You just don't use the money you have that is already making you more money. You bolded JUSTIFY like that's really important. It's not for me.

How about this one.....do I need to justify this or does this just take common sense? I charge EVERYTHING I buy/spend every month on a cradit card that ends up giving me free nights at hotels....something I need quite a bit these days due to triathlon travel fo rmy kids. Some months I go nearly $3000.00 in debt......it's never less tham $1500.00 or so. I pay it off every month and it costs me nothing. Of course, I can look at it like alot of people want to and say....."oh god, what if I lose my job?" Well, hell, what if I get hit by a truck, or the sun quits shining, or about a million other scenarios..... I have no interest in living that way....never have. I'm more than happy to use someone else's money so that my money keeps working. Or, in the case of the credit card, I'm using someone else's money to save money that I don't even have to have!!! LMAO

YOU DON'T HAVE TO SAVE ANYTHING!!!!!!!

Clearly we are not talking about debt that extends less than 30 days here. Get it? Are you sure?

Okay lets take your truck example. You buy a $40k truck on zero down no interest loan, you pay off $20k in the first 2.5 years of the loan, then you lose your job, can't make the payment and they take the truck back. You are out $20k with nothing to show for it.

You pay cash for a $40k truck, you keep it 2.5 years, you lose your job and need money. You now have a truck worth $30k that you can sell and have the money in hand. Or you can keep the truck as it is paid for so you can go out job hunting. Neither situation is ideal as a car is a heavily depreciating asset in most cases, but I would prefer scenario #2 if I were in the jobless no money situation that many people found themselves in post 2008.

Now obviously this scenario would play out for someone that does not have a large savings account and/or the most stable career. I would argue they should not be buying the $40k truck in the first place but that is obviously not how many people operate.

I agree with your premise. Personally I used someone else's money at a low interest rate to buy a truck for $21k that is now worth $26k because I was able to find an asset in the car market that would appreciate rather than fall on it's face like most vehicles do. So in my case it works. But in the case of the construction worker who makes steady money now but might not in 3 months, it is probably not in his best interest to "buy as much truck as he can with someone else's money" just so he can make payments for a year or so and then be underwater or lose it all together.

NO!!! I have 20 grand in the bank that can cover that.....but it's been making me money for the 2.5 years you are talking about. If it only made 4% I'm still $2000.00 ahead of where I would have been. Did they have math in school for gen Y'ers?? Seriously.

Look man.....if you don't have 20 grand in the bank to cover paying off the rest of your truck, then you had no business in a $40,000 truck. Oh.....wait......now we ARE getting back to entitlement aren't we? LMAO

Did they teach reading comprehension to you baby boomers?

Brother, there's alot of things you got taught that we didn't NEED to cover.

Actually, Miller, you bring up a good point. There are a bunch of us boomers.....and we're living longer to create a biggter burdenon the system. You youngsters need to start saving now to take care of us....it's not gonna be cheap.

Good points above. I can agree that in certain, limited circumstances it makes more sense to take out a zero or low interest loan and put your money to better use. That's just basic math. Maybe that's what LB was trying to say but it got jumbled up in the context.

It all depends on what the alternative is. If you borrow at a cheap rate, and then save the equivalent amountat a higher rate, then yes you're better off. Both the purple text and the green text need to hold true.

All too often, people aren't disciplined about the saving part.

This is definitely the crux of the issue with that theory.

No...you don't actually HAVE to save the equivalent amount.....that's silly. If I buy a new truck for $35,000 at 0% interest I don't have to save $35,000 to make it work for me. In fact, I can save NOTHING and just the fact that I didn't use my own money that was already/still is gaining interest makes it a win for me. Like I said......you all sure like to complicate things. LOL

You're nitpicking language. You have to not spend the $35,000. That's savings. I'm not saying you have to save even more on top.

My wife has a 6 figure income.....and still owes about 25,000 in student loans from a degree she earned 20 years ago. She pays the absolute minimum, and always will....I think she has it down to a couple hundred bucks per month due to some govt. refinance program she found. She looks at it as the price of a decent job and doesn't give it a thought.

Both of my older daughters have fairly large student loans as well.....and both make fairly large incomes to go along with it.....they do the same.....figure out what the minimum payment would be to still be compliant.....and pay that. There is NO WAY in hell I would work to quickly pay off a student loan.....especially if you are not settled in your career. You could end up with a company or other entity that pays your loan off for you.

Has your wife ever calculated the total interest she has paid over those 20 years? Bet it's ugly.

Who cares? It's an absolute fraction of the money she has made from her salary. I'll say this for you Gen Y'ers....you sure like to make life complicated.

Haha, doesn't matter to me what your wife does with her money.

But I can see a lot of value in getting rid of debt quickly, can open up other opportunities or just put one in a better position in case something unexpected happens.

Is the idea of a company paying off your student loan commonplace? I have never heard of such a thing.

Getting rid of student loan debt early makes no sense to me. I have my loans consolidated at 3% interest. I could pay extra to my student loans every month OR I could put more in my retirement account where it will make more than 3%. Why wouldn't I save more?

beacause you are lucky to have the cheapest loan interest ever. Nowadays its more like 6%

Yes. I graduated in 2002, at which point I consolidated loans and locked in at that rate. I am very fortunate. I was also not trying to make a case for anyone else, just giving my example. Sorry if it came off differently.

One thing I realized about this debate is when Gen X was graduating from college didn't they say the same thing? Is it one of those common thing the older generation complains about the younger ones?

Yep, moral panic (there is a more specific term for the generational criticism, but my notes from undergrad research are on my old hard drive right now. It's super common, and has been since the beginning of time, but you see the more written documentation in the transition between the Victorian to Edwardian and then first world war periods. Basically, every generation since the beginning of time has believed that the younger generation is lazy, stupid, and not nearly as good as they were...plus their music sucks and their morals are loose. See also: evolution of punk rock and heavy metal cultures, disco, etc. etc. etc.

The re-occurring argument is:
A: THIS GENERATION IS SO LAZY AND (insert pet peeve here) AND ITS JUST GOING TO HELL IN A HANDBASKET!!!!!111!
B: Actually, they're doing OK, considering what they've been dealt and the things they've been taught by us and our generation.
A: NO, no no no. This generation IS THE WORST. They have no redeeming value! This will be the end of us!
B: Didn't your parents say that about us when you wore those platforms and bell bottoms?
A: That was DIFFERENT. We had VALUES. These kids are too busy with their iPods and their whatevers.
B: Didn't your parents say you spent too much time on the phone.
A: Yes, but that was DIFFERENT. Look at what they're wearing these days!

And so it has been since the dawn of parents and kids. Parents criticize the pop culture of their children (which, incidentally, they helped create), they criticize the political decisions made by the younger generation (often in reaction to or because of the decisions made by their generation), and they criticize the education and moral content of the younger generation...which is a product of the teaching and instruction of the generation before them...

It's a never ending cycle, and ultimately, the world doesn't end, people find their feet, and no one likes anyone's music. (Cue justification about how the Millennials are going to be the end of us...)